IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-60119

GARY CHENEVERT,

Plaintiff – Appellee

v.

TRAVELERS INDEMNITY COMPANY,

Defendant – Appellant

Appeal from the United States District Court

for the Northern District of Mississippi

Before JONES, WIENER, and GRAVES, Circuit Judges.

JAMES E. GRAVES, JR., Circuit Judge:

In Massey v. Williams-McWilliams, Inc., 414 F.2d 675 (1969), we 

considered the case of a shipowner/employer who made voluntary payments to 

an injured employee under the Longshore and Harbor Workers’ Compensation 

Act (“LHWCA”) and who was later held liable to the worker in a Jones Act 

claim. We held that the shipowner/employer was entitled to “a credit against 

those items of [Jones Act] damages . . . that bear a reasonable relation to the 

items of loss compensated by [LHWCA] benefits.” Id. at 680. The present case 

requires us to answer a related question: whether an insurer who makes 

voluntary LHWCA payments to an injured employee on behalf of a 

shipowner/employer is entitled to recover these payments from the employee’s 

settlement of a Jones Act claim against the shipowner/employer based on the 

United States Court of Appeals

Fifth Circuit

FILED

March 7, 2014

Lyle W. Cayce

Clerk

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No. 13-60119

same injuries for which the insurer has already compensated him. We hold 

that such an insurer acquires a subrogation lien on the employee’s Jones Act 

recovery for the amount of LHWCA benefits paid. Accordingly, we REVERSE 

the district court’s denial of the motion to intervene filed by Travelers 

Indemnity Company (“Travelers”) and REMAND with instructions.1

BACKGROUND

Gary Chenevert was employed by GC Constructors (“GC”) as a crane 

operator. In May 2007, Chenevert fell and was injured while working on a 

barge with a mounted crane. At the time of Chenevert’s accident, Travelers 

provided coverage to GC for, among other things, its workers’ compensation 

exposure to injured longshore and harbor workers. Travelers provided no 

coverage for “bodily injury to a master or member of the crew of any vessel.” 

Between May 2007 and May 2010, Travelers voluntarily paid Chenevert a total 

of $277,728.72 in indemnity and medical benefits under the LHWCA.

In May 2010, Chenevert sued GC in federal court, alleging that he was 

working as a seaman at the time of his accident and seeking damages under 

the Jones Act for GC’s negligence. Based on Chenevert’s claim that he was a 

“seaman” (rather than a “longshoreman”), Travelers stopped making payments 

under the LHWCA. In November 2010, GC filed a notice of lien claiming that, 

in the event judgment is rendered in favor of Chenevert on his Jones Act claim, 

GC “has a lien against any funds due and payable to Travelers Insurance 

Company who is the insurer under the U.S. Longshore and Harbor Workers’ 

Compensation Act.”

Although Chenevert, through counsel, initially represented to Travelers 

that he did not contest Travelers’s lien, he explained in August 2011 that he 

1 Travelers was incorrectly characterized as a defendant in the district court, and is 

therefore incorrectly characterized as a defendant in the caption for this opinion. Travelers 

is in fact a movant that is currently appealing the denial of its motion to intervene.

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intended to oppose any effort by Travelers to recover from his pending 

settlement with GC. In October 2011, Travelers was granted permission to file 

an untimely motion to intervene.2 On October 27, 2011, Travelers moved to 

intervene in Chenevert’s suit for the purpose of asserting its subrogation rights 

against any money recovered by Chenevert.

At some time between October 18, 2011, and October 27, 2011, 

Chenevert and GC agreed on a settlement. In November 2011, GC notified the 

district court that it had reached a settlement with Chenevert and requested 

that $277,782.22 of the settlement funds be deposited into the court’s registry 

pending the outcome of the dispute between Chenevert and Travelers. The 

district court granted this motion.3 Chenevert and GC ultimately settled for 

$1,725,000, with $277.728.72 of this amount deposited into the district court’s 

registry. In December 2011, the district court granted Chenevert and GC’s 

joint motion for dismissal of Chenevert’s claims against GC, with the case 

remaining open to allow resolution of Travelers’s pending motion to intervene.

After the death of U.S. District Judge W. Allen Pepper, Jr., who had been 

presiding over the case, the case was randomly reassigned to a different district 

judge. However, for reasons that are not clear, a magistrate judge entered an 

order approximately two months later denying Travelers’s motion to intervene. 

Travelers filed a motion to reconsider, arguing that the magistrate judge had 

no authority to enter the order because the parties had not consented to the 

magistrate judge’s jurisdiction, and the district court had never referred the 

2 Under the scheduling order in place, motions were required to be filed no later than 

May 16, 2011.

3 GC’s motion stated an incorrect amount to be deposited; the amount was later 

corrected to $277,728.72.

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motion to the magistrate judge for a proposed ruling. Travelers also objected 

to the substance of the magistrate judge’s order.

In response to Travelers’s motion, the magistrate judge withdrew his 

earlier order and submitted a somewhat expanded analysis as a report and 

recommendation to the district court. Travelers filed objections to this report 

and recommendation. The district court adopted the magistrate judge’s 

recommendation in a memorandum opinion, denying Travelers’s motion to 

intervene. The district court held that Travelers has no right of subrogation

as to the settlement proceeds, and therefore no interest in the property in the 

case. The district court also held that Travelers’s interests in the litigation had 

been adequately represented by GC. Travelers now appeals.

DISCUSSION

Under Federal Rule of Civil Procedure 24(a)(2), a party is entitled to 

intervene if:

(1) the motion is timely; (2) the putative intervenor asserts an 

interest related to the property or transaction that forms the 

basis of the controversy in the action into which he seeks to 

intervene; (3) the disposition of the action may impair or impede 

his ability to protect that interest; and (4) it is not adequately 

represented by the existing parties.

Effjohn Int’l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 560 (5th 

Cir. 2003). A district court’s ruling under Rule 24(a)(2) is reviewed de novo. 

Ceres Gulf v. Cooper, 957 F.2d 1199, 1202 (5th Cir. 1992). We discuss below

whether Travelers has an interest in the settlement fund and whether its 

interest was adequately represented; the remaining elements are not disputed.

I. Double Recoveries Involving the LHWCA

A. The LHWCA and Third-Party Vessel Suits

The LHWCA, like other workers’ compensation schemes, embodies a 

compromise between workers and employers: workers injured on the job 

receive quick, certain compensation from their employers regardless of fault, 

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but employers are generally absolved from any further liability in relation to 

such injuries. See, e.g., 1 The Law of Maritime Personal Injuries § 2:1 (5th ed. 

2012). However, the LHWCA generally preserves an injured worker’s 

remedies against third parties who may have caused the injury. For example, 

a worker covered by the LHWCA whose injury is “caused by the negligence of 

a vessel” may bring an action against the vessel. 33 U.S.C. § 905(b). 

It is therefore possible for an injured worker to obtain a tort recovery 

from a third party based on injuries for which he has already been 

compensated by his employer under the LHWCA. Although the LHWCA “does 

not expressly provide for reimbursement from a judgment or settlement 

obtained by the worker from a third party of compensation benefits that an 

employer has already paid,” courts “have uniformly held . . . that an employer 

has a subrogation right to be reimbursed from the worker’s net recovery from 

a third party for the full amount of compensation benefits already paid.” Peters 

v. North River Ins. Co., 764 F.2d 306, 312 (5th Cir. 1985). Furthermore, if 

compensation benefits are paid by an employer’s insurer, that insurer is 

subrogated to the employer’s reimbursement rights under the LHWCA. See 

id. at 308 n.1 (citing 33 U.S.C. § 933(h)).

In Taylor v. Bunge Corp., 845 F.2d 1323, 1324 (5th Cir. 1988), this court 

considered a case in which a longshoreman was injured by a vessel owned by 

his employer. The worker received LHWCA benefits from his employer’s 

insurer and later sued the vessel for negligence pursuant to 33 U.S.C. § 905(b). 

Id. The worker and the vessel settled for $700,000 “over and above the 

worker’s compensation benefits already paid,” in effect trying to settle around 

the insurer’s lien. Id. at 1325. The insurer intervened and attempted to 

enforce the employer’s lien against the settlement fund to recover the benefits 

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it had paid. 4 Id. We recognized circuit precedent holding that “an injured 

longshoreman and a third party defendant cannot settle around the employer’s 

lien.” Id. at 1324 (citing Peters); see Peters, 764 F.2d at 308 (holding that 

“settlement of the worker’s claim necessarily settled the employer’s 

subrogation claim and entitled the employer to reimbursement to the extent of 

the funds that the third party has agreed to pay in settlement”). We considered 

“whether this principle survives when [the] employer wears two hats as 

employer and as vessel.” Id. at 1324-25. We concluded that the same principle 

is fully applicable and held that “the worker’s compensation carrier’s ability to 

recover under the employer’s lien against the settlement fund is not affected . 

. . by the fact that [the insured employer] was both employer and owner of the 

Vessel.” Id. at 1330.

B. The LHWCA and Jones Act Suits

A worker who has received LHWCA benefits may also obtain a double 

recovery for the same injury by suing his employer for negligence under the 

Jones Act. The Jones Act provides that “[a] seaman injured in the course of 

employment . . . may elect to bring a civil action at law . . . against the 

employer.” 46 U.S.C. § 30104. “[T]he Jones Act and the LHWCA are 

complementary regimes that work in tandem: The Jones Act provides tort 

remedies to sea-based maritime workers, while the LHWCA provides workers’ 

compensation to land-based maritime employees.” Stewart v. Dutra 

4 The employer argued that allowing an insurer to exercise the employer’s lien would 

“conflict[] with the basic principle of insurance law that an insurer may not subrogate against 

its own insured,” because the employer had agreed to indemnify the worker for any attempt 

by the insurer to exercise the lien against the settlement fund. Taylor, 845 F.2d at 1329, 

1325 n.6. The panel rejected this argument for two reasons. Id. at 1329-30. This issue does 

not arise in the present case because GC did not agree to indemnify Chenevert against 

Travelers’s attempt to enforce the lien.

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Construction Co., 543 U.S. 481, 488 (2005).5 As the Supreme Court has 

recognized, a worker whose job title fits within one of the enumerated 

occupations of the LHWCA (such as a longshoreman or a ship repairman) may 

nevertheless be a “seaman” excluded from LHWCA coverage and entitled to 

bring a claim against his employer under the Jones Act. See Southwest Marine, 

Inc. v. Gizoni, 502 U.S. 81 (1991). This is a “fact-specific” question that 

“depend[s] on the nature of the vessel, and the employee’s precise relation to 

it.” Id. at 88 (quotations omitted). Furthermore, “an employee who receives 

voluntary payments under the LHWCA without a formal award is not barred 

from subsequently seeking relief under the Jones Act” because “the question of 

coverage [under the LHWCA] has never actually been litigated.” Id. at 91.

As the Supreme Court noted in Gizoni, the LHWCA “specifically provides 

that any amounts paid to an employee for the same injury, disability, or death 

pursuant to the Jones Act shall be credited against any liability imposed by 

the LHWCA.” 502 U.S. at 91 (citing 33 U.S.C. § 903(e)). We have previously 

held that the reverse is also true; i.e., that a shipowner-employer who 

voluntarily pays LHWCA benefits to an injured employee and is later found 

liable under the Jones Act is entitled to “a credit against those items of 

damages . . . that bear a reasonable relation to the items of loss compensated 

by workmen’s compensation benefits.” Massey v. Williams-McWilliams, Inc., 

414 F.2d 675, 679-80 (5th Cir. 1969). The question presented by this case is 

whether the principles of Peters and Taylor are applicable in the context of a 

Jones Act settlement. In other words, does an insurer who has made voluntary

5 The LHWCA provides that an “employee” covered by the Act does not include “a 

master or member of a crew of any vessel.” 33 U.S.C. § 902(3)(G). The Supreme Court has 

explained: “[M]aster or member of a crew” is a refinement of the term “seaman” in the Jones 

Act; it excludes from LHWCA coverage those properly covered under the Jones Act.” 

McDermott Int’l, Inc. v. Wilander, 498 U.S. 337, 347 (1991).

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LHWCA payments to an injured employee on behalf of the employer have a 

right to be reimbursed from the employee’s settlement of a Jones Act claim 

against the employer based on the same injuries?

II. Travelers’s Subrogation Right

We perceive no sound reason why an insurer’s right of reimbursement 

against a Jones Act recovery should be different from its right of 

reimbursement against a § 905(b) recovery. Arguably, the insurer has an even 

stronger equitable claim to repayment from a Jones Act recovery. A worker 

who recovers against a third party under § 905(b) is necessarily covered by the 

LHWCA and therefore entitled to compensation benefits; nevertheless, the 

worker must still use the proceeds of the recovery to repay the employer or 

insurer for the benefits. On the other hand, a worker who succeeds in a Jones 

Act claim is necessarily a seaman, and therefore not entitled to LHWCA 

benefits. It would be particularly unfair to deny the insurer the right to recover 

the benefits it has paid in such a situation.6

The district court appears to have viewed Travelers’s attempt to assert 

a lien on settlement funds paid by GC (who is insured by Travelers) as an 

attempt to subrogate against its own insured. As the district court recognized, 

as a general rule “no right of subrogation can arise in favor of an insurer 

against its own insured.” 16 Couch on Insurance 3d § 224:1 (2013). However, 

this broad statement “leave[s] out a crucial boundary of the rule: the 

prohibition of insurers’ subrogation against their own insureds applies to 

claims arising from the very risk for which the insured was covered by that 

insurer.” Id. Assuming Travelers’s assertion of its repayment lien against 

6 Two district courts have considered the issue and held that an insurer who has paid 

LHWCA benefits to an injured worker may intervene in the worker’s Jones Act suit against 

his employer to preserve the insurer’s subrogation rights in the event the worker obtains a 

recovery. Kahue v. Pacific Envtl. Corp., 834 F. Supp. 2d 1039, 1060-61 (D. Haw. 2011); Lewis 

v. United States, 812 F. Supp. 629, 633-34 (E.D. Va. 1993).

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Chenevert’s Jones Act settlement fund may be construed in some way as 

asserting a right of subrogation against GC, this would be unproblematic 

because Travelers did not insure GC against Jones Act liability. See also 

Taylor, 845 F.2d at 1329-30 (“[B]y enforcing the employer’s lien against the 

settlement fund, [the insurer] is not trying to avoid the risk against which it 

insured.”).

As explained above, an insurer’s right of reimbursement from an 

employee’s tort recovery is derived from the employer’s right of 

reimbursement; that is, by paying LHWCA benefits to the injured employee on 

behalf of the employer, the insurer is subrogated to the employer’s right of 

reimbursement. See Peters, 764 F.2d at 308 n.1. The magistrate judge, in his 

report and recommendation, reasoned that “[t]o suggest that an employer has 

a lien on a portion of the funds the employer itself agreed to pay in settlement 

the moment it settled the case is nonsense.” However, at the time of 

settlement, it is the insurer, not the employer, who has the lien. The insurer, 

by satisfying the employer’s payment obligations under the LHWCA, becomes 

subrogated to all of the employer’s repayment rights. 

Along the same lines, Chenevert argues that allowing GC to assert a 

repayment lien against a portion of a settlement that it agreed to pay (without 

any provision for repayment of the lien) would in some sense abrogate the 

settlement. But again, it is Travelers that is asserting the lien, not GC. 

Chenevert argues that “Travelers would have no greater right to recover 

money from Gary Chenevert than GC Constructors itself would possess,” but 

this is incorrect. By paying LHWCA benefits on behalf of GC, Travelers 

acquired a repayment lien that is independent of, and cannot be nullified by, 

GC. If this were not so, an employer and employee could easily settle around 

the insurer’s lien and prevent any possibility of recovery by the insurer.

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We hold that an insurer who makes voluntary LHWCA payments to an 

injured employee on behalf of the employer acquires a subrogation lien on any 

recovery by the employee in a Jones Act suit against the employer based on the 

injuries for which the insurer has already compensated him. We therefore 

conclude that Travelers is entitled to the disputed funds in the district court’s 

registry, and that Travelers may intervene for the purpose of collecting these 

funds. See McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1071 (5th Cir. 1970) 

(insurer’s intervention to protect its subrogation interest in a plaintiff’s 

recovery is cognizable as intervention of right under Rule 24(a)).

CONCLUSION

For the reasons explained above, we REVERSE the district court’s denial 

of Travelers’s motion to intervene and REMAND the case for the purpose of 

distributing the disputed funds in the district court’s registry to Travelers.

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